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THE WHITE HOUSE
Office of the Press Secretary

For Immediate Release

April 14, 1999

REMARKS OF THE PRESIDENT
ON UNIVERSAL SAVINGS ACCOUNTS

The Rose Garden

3:09 P.M. EDT

THE PRESIDENT: Thank you very much. Andrew and Theresa
and I were walking down here, and they were mildly nervous because
they don't do this every day. But I think you did a very fine job.
(Applause.) I want to thank them and their three sons for coming.
I'd also like to thank Felicia Harris and her daughter, Alexis, who
came because they're another representative family who will be
benefitted by the USA Account proposal.

I thank Senator Barbara Boxer who is here and has had to
stand up here alone because all of the House members who were
supposed to be with her are back at the House voting, and I
appreciate her being here. I want to thank Secretary Rubin for his
leadership on this issue, along with Deputy Secretary Larry Summers
and Secretary Shalala; Gene Sperling, my National Economic Counselor.

You know that we want to talk to you about a major issue
relating to retirement security in the 21st century. I think it's
important to start out by saying that this will be a very big deal to
a lot more people. We all know that the number of people over 65
will double by the year 2030. By the year 2050, the average American
will live to be 82 years old.

Now, keep in mind that in 1900, life expectancy was only
47 1/2 years. It took 4,000 years, the majority of all recorded
history, to make a leap in longevity like the one we have seen in
just one century. Now, as I get older, I remind everyone that this
is a very high-class problem, and I like it better as the years go
by. They are a precious gift.

President Roosevelt said, there is no tragedy in growing
old, but there is tragedy in growing old without means of support.
Historically, our people have relied upon three basic means of
support. First, Social Security. It became the basic means of
support and still alone is responsible for lifting almost half of our
senior population out of poverty. But it was never supposed to be
seniors' only means of support. And we see by the fact that the
poverty rate among elderly single women is twice that of seniors in
general what happens when Social Security is the only means of
support.

Pensions are the second, and private savings are the
third. Retirement, to be truly secure, needs a mix of all three.

Well, how strong are these building blocks for most
Americans? First, Social Security. It's a rock-solid guarantee
and it has been for generations. But for the 18 percent of the
seniors, as I said, for whom Social Security is their only source
of retirement income, life is still pretty tough.

The first thing we have to do is to make sure that
Social Security will be there for the baby boomers. As I said in
my State of the Union address, that's why we ought to set aside
62 percent of the surplus to save Social Security and at the same
time, as Secretary Rubin said, to pay down our national debt.

We also need to be very mindful that Medicare is quite
important not only to Social Security recipients who have that as
their only source of income, but to a lot of other seniors as
well. And we need to set aside enough money from the surplus to
secure Medicare well into the next century.

Our budget plan pays down the debt and saves Social
Security and Medicare. I look forward to working with Congress
over the coming months to make some changes that are necessary to
lengthen the life of both the Social Security and the Medicare
trust funds, to maintain our fiscal discipline and secure the
health of our economy into the 21st century.

Now, what about the second building block -- private
pensions? Half of all American workers, 73 million of them, have
no employer-provided pensions whatever. IRAs and 401Ks are
something they hear and read more and more about, but don't have
for themselves. Currently, only one-third -- listen to this --
only one-third of the tax benefits for pensions and retirement
savings go to families who earn less than $100,000, even though
they represent the vast majority of working people in the United
States today.

The third building block is personal savings.
Americans living longer than ever and moving from job to job, who
may have defined contribution rather than defined benefit pension
plans, more and more will need to increase their personal
savings. Our national savings rate has doubled over the last six
years because we're saving more in the government and not having
deficits.

But personal savings has gone down over the last six
years. Too few Americans are saving for their own retirement.
For too many Americans, the hard work they do to provide for
their families today, as you've just heard, makes it difficult
for them to save for tomorrow. The typical family, headed by
someone between the ages of 55 and 64, has financial assets worth
just $32,000. That won't support them very long in their
retirement. For many Americans, as their lives stretch longer,
their resources are stretched thinner.

I believe Americans who work hard their entire lives
and raise their children should not have to have their retirement
posed precariously on the edge of poverty. I believe that
Americans, however, have to do more to save for their own future,
but that Americans deserve the chance to do that.

Now, that's what this USA Account proposal is all
about. It is a complete and comprehensive new plan to help
Americans with retirement savings for the 21st century. It is
the right way to provide tax relief for the American people, and
it is the right way to increase savings and strengthen our
economy, even as we help families like the ones we honor today.

Now, I proposed in the State of the Union address
setting aside 12 percent of the surplus to establish these
accounts. Let me say specifically what I think we ought to do.
I propose that Americans be given the chance to open,
voluntarily, Universal Savings Accounts. I propose that workers
receive a refundable tax credit if their incomes are up to
$80,000 a year, deposited directly into their USA accounts, and
as they save, that the government help them save further,
matching their contributions on a sliding scale, depending on
income, giving extra help to those least able to save.

Further, I propose that aid be given to people with
incomes between the incomes of $80,000 and $100,000 a year, but
on a reduced basis. And even for people with incomes over
$100,000 a year, if they have no other personal retirement
savings or pensions, they should also be eligible for this help.

This would give many, many millions of Americans a new
opportunity to invest in the growing American economy, to have
some wealth and security in retirement. It will revolutionize
savings not simply for older Americans, but especially, perhaps,
for younger Americans, from their very first days in the work
force. With USA accounts everyone in the USA will be able to
save, especially if we get more and more congressional support as
we go along. (Laughter.)

Now, let me go through the reasons that I believe that
this is the right way to provide tax relief with the surplus, and
I would like to go through some very specific things. First of
all, Universal Savings Accounts do just what the name says, they
make savings universal. It would be many workers' first, or
certainly their best, opportunity ever to save. And by rewarding
responsibility, USA Accounts would help set them on the road to
further savings.

Second, USA Accounts make investment universal.
Savings, of course, is about more than protecting what you have,
it's about creating and building greater wealth for a better
future. With these accounts, working families will have a chance
to invest just as wealthier families do today. They can choose
to invest in an interest-bearing account or a stock market mutual
fund or a bond fund, just as they would with a government or
private pension.

Third, they make real retirement security universal,
extending it even to workers with low and moderate incomes who
are least likely to be offered pensions by their employers and
least likely to be able to save on their own. As I said earlier,
I want to emphasize this again today -- only a third of all the
tax benefits provided under all the laws of Congress of existing
retirement plans go to families earning less than $100,000.

You heard what our distinguished speaker said. Listen
to this. I mean, does this family -- these look like the people
you want to help, right? I mean, they're making America great.
Only seven percent of existing tax benefits for retirement go to
families with incomes of $50,000 a year or less -- only seven
percent.

Our plan more than doubles that. More than 80 percent
of the tax benefits of USA Accounts will go to people making
incomes of $100,000 a year or less. It's the vast majority of
the American people and it's the right thing to do. It is the
kind of tax cut America needs, targeted toward working families,
toward savings, and toward the future.

USA Accounts will add up. For example, if a couple
earning $40,000 saved just $700 a year, matched by the
government, a USA Account invested conservatively would be worth
a quarter of a million dollars after 40 years. How many people
making $40,000 a year in this country today have a quarter of a
million dollars in wealth? Think what this could do for America.

That means -- let me just say what it means practically
-- it means that a person could retire and, just from this
account, living over 80 years, have well over $15,000 a year in
income during retirement. That's the power of savings and
compound interest.

But USA Accounts involve more than compound interest.
They also add up to a larger stake in our society and its future.
Families who own very few financial assets would now own a share
of our nation's prosperity and in the remarkable economic growth
they have done so much to create. People like Andrew and
Theresa, people like Felicia Harris, people working hard, raising
their children, thinking about their children's future, would
have their first real chance to save for tomorrow while they are
working today.

With USA accounts we can say to a 25-year old just
starting a family, you can start to save. With these accounts we
can say to someone who has made a transition from welfare to work
and is watching the stock market surge in value, you actually can
have a stake in this wealth you are helping to create. We can
say to working families, now you can think about your children's
future, and your own.

So, as I stand here at the end of one century and the
dawn of the next, and I think about what I would like family life
to be like 10, 20, 30, 40 years from now, one of the things that
I want very badly to do is to see our wealth more fairly shared
by those who create it, and to see it shared in a way that makes
sure that, as we live longer and longer, those of us who retire
will not pose unconscionable financial burdens for our children
and their ability to raise our grandchildren.

Saving Social Security and Medicare is a part of that.
Having the right sort of tax cut is a part of that. The USA
accounts increase savings, increase retirement security, and will
give millions and millions and millions of families who are a big
part of this remarkable recovery we have enjoyed for the last six
years -- for the first time, those people will have a chance to
actually own a piece of the American recovery they have done so
much to create.